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A Discrete Model for Patent Valuation

  • Roy Cerqueti

    (University of Macerata, Italy. Department of Economic and Financial Institutions)

  • Marco Ventura

    ()

    (ISAE - Institute for Studies and Economic Analyses)

This article evaluates patents in a stochastic discrete time framework following the real options approach. By modeling the dynamics of the underlying as a spatial point process both size and time of the jumps can be treated as random variables. The propagation of the jumps from the underlying security to the patent value is not restricted to be immediate, but can occur with a random delay and with varying intensity, depending on the time to maturity. These actual features lead to a more generalized formula for patent value, that in turn may give rise to a non trivial difference in patent value, not accounted for in the existing literature.

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File URL: http://lipari.istat.it/digibib/Working_Papers/WP_120_2009_Cerqueti_Ventura.pdf
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Paper provided by ISTAT - Italian National Institute of Statistics - (Rome, ITALY) in its series ISAE Working Papers with number 120.

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Length: 37 pages
Date of creation: Dec 2009
Date of revision:
Handle: RePEc:isa:wpaper:120
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  1. Marc Baudry & BĂ©atrice Dumont, 2006. "Patent Renewals as Options: Improving the Mechanism for Weeding Out Lousy Patents," Review of Industrial Organization, Springer, vol. 28(1), pages 41-62, 02.
  2. Ariel Pakes, 1986. "Patents as Options: Some Estimates of the Value of Holding European Patent Stocks," NBER Working Papers 1340, National Bureau of Economic Research, Inc.
  3. Mark Schankerman & Ariel Pakes, 1985. "Estimates of the Value of Patent Rights in European Countries During thePost-1950 Period," NBER Working Papers 1650, National Bureau of Economic Research, Inc.
  4. Helen Weeds, 2002. "Strategic Delay in a Real Options Model of R&D Competition," Review of Economic Studies, Oxford University Press, vol. 69(3), pages 729-747.
  5. Ming-Cheng Wu & Chun-Yao Tseng, 2006. "Valuation of patent - a real options perspective," Applied Economics Letters, Taylor & Francis Journals, vol. 13(5), pages 313-318.
  6. Lambrecht, Bart & Perraudin, William, 2003. "Real options and preemption under incomplete information," Journal of Economic Dynamics and Control, Elsevier, vol. 27(4), pages 619-643, February.
  7. Cerqueti, Roy & Foschi, Rachele & Spizzichino, Fabio, 2009. "A spatial mixed Poisson framework for combination of excess-of-loss and proportional reinsurance contracts," Insurance: Mathematics and Economics, Elsevier, vol. 45(1), pages 59-64, August.
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